The 2% Puzzle

Posted on September 10, 2013 at 8:34 pm.

First the good news: According to Giving USA, Americans gave $316.2 billion to charity last year. Now the puzzling news: that figure represents 2% of the Gross Domestic Product. Why is that puzzling? Because for the last forty years, giving in the United State has been at 2% of the GDP, never varying by more than .3% from that figure. On the individual level, that translates to giving 3.1% of income before taxes. That means Americans have an almost uncanny ability to know how the economy is faring and to adjust their charitable giving accordingly.

The 2% puzzle means we have reached a uneasy stasis in America when it comes to our most pressing challenges. Poverty remains at a stubborn 12%-15% overall with 20% of children living at that level. The reductions in federal and state aid makes those pressures even more critical. Schools in low income areas do not have the resources to help students achieve, perpetuating the cycle. Access to the arts, which has been proven to raise math scores and improve critical thinking, has been drastically reduced or eliminated in many communities. Yet we keep chugging along at our 2% clip year in and year out.

Why can’t we move the needle? I will offer an explanation from my own experience working with donors. People don’t give to charity simply because they seek change or want to help others or to enrich the community (although all those play a role); they give because they feel obligated to do so. Once they have met that obligation emotionally, intellectually, or spiritually, they stop. And clearly, for the vast majority of Americans, that point is the puzzling 2%.

People feel the obligation to give for a variety of reasons: religion, economic status, guilt, peer pressure, morality, and a deep feeling of satisfaction all play a role. Through trial and error, most people find a level of giving that fulfills the dictates of the factors mentioned, and they remain perfectly content there regardless of the impact of their giving or the actual need.

Those that rocket past the averages and give more have abandoned an obligation to give and have discovered a compelling reason to give instead. We can call this learning to feel the need. In other words, something occurs that personalizes the cause in which the donor invests. This helps to explain why those earning less than $10,000 a year give a much greater percentage of their income (5.2%) than those in the top 20% of income (1.3%). They simply have a much greater exposure to the needs charities seek to address. Chances are a friend or relative has benefited from a nonprofit’s help. We see the same result when a donor loses a loved one to a particular disease and then works tirelessly to help find a cure.

As nonprofits, we need to take a long, hard look at why we aren’t making these personal connections to spur greater investment in our causes. Every year, the number one complaint in surveys of donors is that they don’t have a clear idea of what happens to their money. We have to do a better job of telling the stories of the lives we change and the communities we serve and the marginalized we protect. Instead of seeing the communication of our work as a means to raise money, we need to see it as part of our core mission of letting the public know the issues, successes, and opportunities our organizations accomplish and engage each day.

This will mean exposing donors to our work beyond a mere brochure or fundraiser. We must find creative and innovative ways to help donors feel the need and to allow them to participate in the solutions beyond just a monetary donation. This will mean allowing more space to listen and more willingness to respond to what hear from both those we serve and those that support us.

And once we do that, we have to be ready for donors to demand more from us. They will want more lives transformed; they will insist on measurable goals of success; they will need to know why the same problems continue to persist. And in turn we will be able to demand more from our donors. We can honestly tell them that if they want systemic change they must increase the scale and capacity of nonprofits that can achieve those results.

Perhaps the 2% puzzle isn’t all that puzzling after all. People have become comfortable with what they give and we have become comfortable with what we get. That isn’t fair or just to all those that need our help and sacrifice so much just trying to get through the day with their dignity and hope intact.